Fighting to Reverse the Foreclosure Crisis

Neither rain nor snow… could keep the members of the Mass Alliance Against Predatory Lending away from the State House!

Amidst inches of snow this past Tuesday, January 18th, scores of Massachusetts residents from different walks of life slogged to the Massachusetts Statehouse for speak out about the ever-increasing foreclosure crisis and talk to their legislators about four bills to reverse this crisis.

Massachusetts has probably been the home to the most powerful anti-foreclosure organizing – combining street action, mutual support, legal action and the financial intervention of a non-profit bank, Boston Community Capital. But nothing, nothing pretty much has been accomplished without pressure on the lenders. There’s situation now that City Life/Vida Urbana combined organizing strategies has been trying to address – typical of most owners foreclosed on these days, the Pierre family could afford regular mortgage payments on their present home IF the mortgage was based on the real, present day value of the property not the hugely inflated values of the housing bubble.

So their lender, Sovereign, was approached by Boston Community Capital for a short sale; they agreed to a price and terms. Then, the found out BCC was going to sell back to the former owner. They will have made the money they had decided was the best they could do – the short sale. But, as we see over and over again, the lender is apparently not motivated by making what money they can, they have decided to foreclose. Why? Only logic, they care more about punishing the former owner.

And so we have fallen through the looking glass. While we have somehow been convinced that the big banks, the mortgage lenders, have to be smart, have to have had a plan and logic to all these subprime loans with conditions so complex that even with them explained most borrowers would never have known the economic trap they were signing up for. But as our own Massachusetts Supreme Court Justice Gants pointed out, the lenders who developed these conditions over a decade since they had come into being in the early 1990s, had to have known how they were trapping borrowers.

And so the story continues for those of us on the ground since we identified the subprime trap, how it fueled an amazing and impossibly huge housing bubble, and that its funding had tendrils that meant it was going to pull down the entire world economy when it collapsed. Our lives abound with stories of unethical and illegal examples of lender behavior.

This has been my weirdest organizing experience. Here are tenants, home-owners and former home-owners all begging, begging – often with tears in their eyes – when we knock on their doors – that we make the banks take their money. In this context, how do you make laws?

Lenders foreclose even when there are short-sales, full-sales, when the borrowers can afford to pay! Another study has shown they make back an average of 58% when they foreclose; 80% when they re-write a mortgage on average even when they write down the principle and take a loss.

Lenders evict everyone post foreclosure if they can – even when investors report they prefer to buy property filled with tenants with a track record of being responsible and paying, even when they make money collecting rents until they re-sell, even when insurance actuarial table prove that vacant property degrades very quickly even to the point of becoming unsalvageable.

So here we are. The foreclosure crisis is spreading in our state – more foreclosures, reaching even into rural and wealthy suburban communities. More properties ruined, increased violent crime, more homeless families, draining of municipal coffers to deal with these properties, destruction of neighborhoods, the fabric and economy of our communities. Some $2 billion in losses from our state’s economy every month the crisis continues…

So yes, the foreclosure issue is very hot at the State House – our briefing garnered 4 TV stations and WBUR, lead articles in the Globe and other papers. But we have to ask ourselves, how is it with all this illogic actions and neglect of their own assets, all the now widely publicize malfeasance on the part of the big lenders (and that is just the tip of the iceberg) that lenders are not facing swift regulatory action of every kind? How are they not losing every court case? How can they not simply be the laughing stock of every politician from across the political spectrum?

More importantly, why are we not out standing on the front yard or steps of every neighbor being foreclosed or evicted and putting our bodies collectively in the way? Why have we not pulled every dollar and cut up every credit card from a major bank?

And if you have not done it yet, call your State Representative and Senator and tell them to back MAAPL’s four bills this session and take them to the fastest possible passage! Building on a groundbreaking success last session in extending rights for former tenants’ post-foreclosure, we need you to help us arrest this crisis as fast as possible.

We have four bills
1) So judges can make sure there is clear title before a lender can evict someone post-foreclosure
2) Stopping the vacating of the major f post-foreclosed homes by allowing former home-owners post-foreclosure who are capable of paying fair market rents to stay until the place is re-sold (like we got for former tenants last year)
3) Mandatory mediation with a neutral third party so lenders have to provide an authorized representative to negotiate with owners pre-foreclosure – so they have to respond to reasonable solutions such as sales, re-financing (including writing down principle), even accepting mortgage payments!
4) Making all foreclosure of building with owner occupants have to be done in front of a judge – so home-owners get to make their case AND the banks legal paperwork gets checked by a judge!
And whatever else you want to know, go to www.maapl.info - and get involved wherever you live! Thanks!

Grace C Ross is Coordinator of the Mass Alliance Against Predatory Lending and life-long community organizer. She ran for governor in 2006 and 2010; she was polling at 27% in the general electorate when she was running in 2010.